176 A.D. 697 | N.Y. App. Div. | 1917
The action was in equity to restrain the defendant from either directly or indirectly interfering with the rights of the plaintiffs in the use of the words “A. A. Waterman,” “A. A. Waterman & Co.,” and from bringing any action at law or in equity for damages or for an injunction against any person by reason of the fact of the manufacture or sale by such person of any fountain pen or any part thereof having the words “A. A. Waterman & Co.,” and from entering any restraining order in relation to such words, and from publishing or circulating copies of an injunction order granted by the United States Circuit Court of the Northern District of Ohio in the suit of L. E. Waterman Company against Standard Drug Company. The defendant’s answer, after denying material allegations of the .complaint, by way of defense and counterclaim, alleged its prior right to the use of the word “Waterman” in connection with the manufacture and sale of fountain pens and claimed the use of that word by the plaintiffs was an unlawful and unfair use of the defendant’s trade name and prayed an injunction restraining the plaintiffs from directly or indirectly making, selling, offering for sale or advertising any fountain pen of other manufacture than that of the defendant under the name of Waterman, and for damages.
The facts, as developed by the evidence, and fortunately there is but little controversy as to the essential facts, are briefly as follows:
The defendant was incorporated in 1887 and succeeded to the business, good will, trade marks and trade names of-Lewis E. Waterman, and has continued in business to the present time. The defendant has expended large sums in advertising these pens and the business has steadily increased and a large and lucrative business has been built up. These fountain pens have become widely known and recognized and are called for by the general public as “Waterman” pens. Thus the name of “Waterman” in connection with fountain pens has been for more than thirty years well known to the trade and general public as indicating the defendant’s company and the goods manufactured and sold by it.
Arthur A. Waterman, for some five years prior to February, 1897, was an employee of the L. E. Waterman Company, and while in its employ formed the intention of going into business for himself in the manufacture and sale of fountain pens. He left the defendant’s employ in February, 1897, and in May, 1897, went into business with Edward L. G-ibson in the manufacture and sale of fountain pens, adopting the name “A. A. Waterman Pen Company,” although they were not a corporation. The L. E. Waterman Company brought an action in the Supreme Court, New York county, against Arthur A. Waterman and Edward L. Gibson which ■ resulted in a judgment perpetually enjoining Arthur A. Waterman and Edward L. Gibson, and each of them-, and all persons taking or holding under, from or through them, from using the said corporate name or any corporate name containing the word “Waterman ” or from advertising the same or employing the same on fountain pens or in connection with fountain pens; also from using in connection with the business of making or selling fountain pens, whether on the holder or gold pen, or on labels, boxes, signs, letterheads, circulars or advertisements, or in any manner whatsoever, the word “ Waterman,” “Waterman’s” or “Watermans’” alone, or the said words
bio appeal was taken from this decree. Immediately after the entry of this decree the firm of A. A. Waterman & Co. (composed of Arthur A. Waterman and Edward L. Gibson) abandoned the use of the trade name “A. A. Waterman Pen Co. ” and continued to manufacture and sell fountain pens under the trade name of “A. A. Waterman & Co.” as permitted by the said decree. This partnership was dissolved in 1899 by mutual consent and an assignment of the partnership assets and good will of the firm was made to one Rhodes Lockwood, and he was given the right to complete all fountain pens in process of manufacture and to stamp such pens “ A. A. Waterman & Company ” and he continued to use the said name until he adopted other trade names. Edward L. Gibson continued in business with Rhodes Lockwood. Arthur A. Waterman started in business in March, 1899, making pens of a style distinct from those previously made by A. A. Waterman & Co., marking said pens “A. A. Waterman, maker,” and doing business under the name of A. A. Waterman. In May, 1899, Arthur A. Waterman formed a copartnership with Edson E. Dewey, under the firm name of A. A. Waterman & Co. This firm continued until December 1900, when it was dissolved, and all the assets of the copartnership were assigned and transferred to the Colonial Pen Company to satisfy an indebtedness to that company. On January 9,1901, Arthur A. Waterman entered into an agreement of copartnership with William G. Frazer and Hobart W. Geyer for the manufacture and sale of fountain pens. Arthur A." Waterman contributed to this copartnership one patent, a few tools, an interest in a patent pending, his personal experience in the trade and his name. The firm name of this copartnership was
The plaintiffs during this period first appear in the transaction; they were connected with the Merritt & Chapman Derrick and Wrecking Company, engaged in the transportation and salvage business; they loaned money to, and became interested in the Frazer & Geyer Company. As a result of financial difficulties' plaintiffs secured the assets of A. A. Waterman & Co. and of the Frazer & Geyer Company.
On June 12, 1905, an agreement of copartnership was entered into between Arthur A. Waterman, Isaac E. Chapman and William L. Chapman for a term of thirty-six years under the firm name of A. A. Waterman & Co. for the purpose of manufacturing, purchasing and selling pens, fountain pens and other articles. Arthur A. Waterman by this agreement granted to the firm the right to use the name of A. A. Waterman and the firm name of A. A. Waterman & Co. in connection with the manufacture and sale of fountain and other pens perpetually and exclusively, except as thereinafter reserved to said Waterman to make use of said firm name, and thereby conveyed to said firm all the good will then existing and attaching to the name of A. A. Waterman and A. A. Waterman & Co. It also provided that such grant should not be modified or diminished by said Waterman ceasing to have an interest in the said firm under the terms of said agreement or by his death or otherwise. The agreement provides for the division of the continent of North America into two districts, therein delineated, called the eastern and western districts,
The Modern Pen Company was incorporated under the laws of West Virginia, and Arthur A. Waterman became a salesman therefor upon commission and assigned to the western district, as described in the copartnership agreement. Arthur A. Waterman did not exercise his option on or before July 1, 1906, and at or about that time ceased to have any further
Thereafter the L. E. Waterman Company, the defendant herein, instituted suits against the Modem Pen Company in the District Court of the United States for the Southern District of New York, against the Standard Drug Company in the United States Circuit Court for the Eastern Division of the Northern District of Ohio, and against John Saadi in the Supreme Court of the District of Columbia, to restrain the parties defendant in said suits from making or selling fountain pens of any other than the complainants’ manufacture, under the name of Waterman or any mark or name in imitation thereof or in close resemblance thereto. The pens particularly designated in said bills of complaint as being sold by the said defendants being those of the manufacture of the plaintiffs herein. In the last two suits above mentioned decrees were entered substantially the same as that issued by the Supreme Court of this State in the action against Arthur A. Waterman and Edward L. Gibson, hereinbefore mentioned.
In the suit against the Modern Pen Company a decree was entered among other things prohibiting the use of the words “A. A. Waterman & Co.” or “A. A. Waterman” without the words “not connected with the original 'Waterman’ pens” in appropriate juxtaposition therewith. (Waterman Co. v. Modern Pen Co., 193 Eed. Rep. 242.) An appeal was taken to the United States Circuit Court of Appeals by both parties, and the decree was modified restricting the defendant to using the name Arthur A. Waterman & Co. instead of A. A. Waterman & Co., and requiring the words “not connected with the L. E. Waterman Co.” to be juxtaposed in equally large and conspicuous letters wherever the permitted name was marked upon any fountain pen sold by the defendant, or upon boxes containing such pen or in advertisements thereof. (Waterman Co. v. Modern Pen Co., 197 Fed. Rep. 536.) Cross appeals were thereupon taken to the United States Supreme Court, and the decree of the Circuit Court of Appeals was affirmed. (Waterman Co. v. Modern Pen Co., 235 U. S. 88.) The learned justice at Special Term has held that this decree is binding upon the parties to this
If the decree in the case of L. E. Waterman Company v. Modern Pen Company (which hereafter for brevity we will term the Modern Pen case) is res adjudicata of the issues raised by the counterclaim we cannot further consider the facts relevant to these issues.
The plaintiff did not by supplemental reply plead that decree as an estoppel, hence it was not admissible in evidence as a former adjudication. (Brazill v. Isham, 12 N. T. 9, 17; Lytle v. Crawford, 69 App. Div. 273,280.) Nor was the decree offered or received in evidence for that purpose as appears from the record. An objection to its admission was made by the defendant’s counsel, and the court said: “ Th at is not res adjudicata. In what respect is it material in this action? ” Plaintiff’s counsel responded, “ In that it fixes the law and that the plaintiffs are not entitled to á broader judgment in this case than was granted by the Supreme Court of the United States in the action of the L. E. Waterman Company against the Modern Pen Company, the exclusive sales agents of the plaintiff.” The court, “And tends to diminish the relief sought for in the complaint; and the court rules that the papers referred to will be received for such specific reason only and for no other purpose whatever.” The sole purpose, therefore, of receiving the decree was to reduce the broad prayer for relief in the complaint, by asking merely for the relief that had been granted in the Modern Pen case. Upon this theory the terms of that decree were no more than a memorandum specifying the change in the prayer for relief which plaintiff desired. Notwithstanding this limitation the court has given the decree full force and effect as a former adjudication. The decree being in evidence
It is elementary that a judgment in an action is a bar to a re-examination into the facts decided as between the parties thereto or their privies.
The decree in the Modern Pen case was not entered in a suit between the same parties that are in this action. Nor were the plaintiffs privies of the Modem Pen Company.
The Modem Pen Company was the sales agent of the plaintiffs. The plaintiffs’ right to manufacture or sell fountain pens was not derived from the Modem Pen Company nor was there a mutuality of interest, not resting in contract, in the subject-matter of the action. Had the plaintiffs in that action been successful and brought this action against the plaintiffs herein, this plaintiff would not have been estopped by the former judgment from litigating the issues which were considered in the former case.
That the estoppel must be mutual is conceded by the plaintiffs and that such a mutuality of estoppel does not arise from the decree in the Modem Pen case is apparently not disputed, for he argues that the plaintiffs herein having offered the decree in evidence as binding upon the plaintiffs it necessarily follows to that extent it is binding on the defendant. The fallacy of this argument is patent. The estoppel of former adjudication is an estoppel by record and is to be determined by the relationship of the parties to the action at and prior to the time of the entry of the decree, or to their successors in interest thereafter.
There is no election, in a party not bound by the judgment, to assume as a benefit that which he did not assume as a risk.
The plaintiffs herein could have assumed the defense of the Modern Pen action if they had been vouched in, or they could have intervened and filed an answer and litigated the issues before the court and thus by submitting themselves to the jurisdiction of the court and assuming the risk of an adverse judgment been in position to obtain the benefit of a favorable one. Thé decree in the Modern Pen case is no more res adjudicates of the issues in the instant case than were the decrees in the Standard Drug Company and the Saadi cases (both of these defendants were selling agents of the Modem Pen Com
The next claim of the plaintiffs is that they are privies of the original A. A. Waterman & Co., composed of Arthur A. Waterman and Edward L. Gibson, and hence entitled to use the copartnership name permitted by the decree of this court in the case of L. E. Waterman Company v. Arthur A. Waterman and Edward L. Gibson, hereinbefore mentioned. A mere reading of the facts, as hereinbefore stated, clearly shows that there could be no privity between the plaintiffs and the original firm of A. A. Waterman & Co.
There is no consecutive chain of title to the business. Nor is there any connection, contractual or otherwise, between the various firms that have carried .on business under that firm name. In all of the copartnerships prior to the last the only similarity between them was that Arthur A. Waterman was a bona fide member of the firm and that it manufactured or sold fountain pens.
The fountain pens were not, however, manufactured under the same patent. As each firm was dissolved its assets and good will were transferred to a third party; this included the patents under which the firm had been manufacturing pens. Then Arthur A. Waterman would take out another patent or patents and organize a new and distinct concern and proceed until financial disaster compelled a repetition of the process. The learned trial justice erred, therefore, in holding that the plaintiffs were privies of the original copartnership of A. A. Waterman & Co., and by reason thereof obtained any right to use the firm name.
We will now consider the right of the plaintiffs in their business of manufacturing and selling fountain pens, to use the name Waterman. It is well settled that “ ‘ every one has the absolute right to use his own name honestly in his own business, even though he may thereby incidentally interfere with and
The management of the firm’s business was vested exclusively in the plaintiffs, while Waterman was allowed to enter “'into contract relations with the Modern Pen Company.” This high sounding phrase in practice meant that he might become a salesman, working on a commission basis for the Modern Pen Company. From a mere reading of this agreement it is evident that so far as Arthur A. Waterman being a member of the copartnership it was a mere sham and a fraudulent device to give verisimilitude to a condition that did not and could not under the terms of the contract exist. Therefore we are not in this case concerned with the right of a man to use his own name in business, but instead, of the power to give the right
It is well settled that to transfer to others the right to use one’s name, when one knows that there already exists another well-known concern using the name which will be injuriously affected by the use of his name, is a fraud if the transferrer knew the name was to be used. (Burrow v. Marcean, 124 App. Div. 665.)
Had this been the case ■ of a man rightfully using his own name in his business then the decree in the Modern Pen case would have afforded the appropriate relief by requiring the pens to be so marked that the fact should appear that although these pens were manufactured by a Waterman firm it was “ not connected with the L. E. Waterman Co.”
But where the sole purpose of the transfer is to enable the transferee to use the name in unfair competition with another, such a remedy is inadequate, and places the stamp of judicial approval upon a consummated fraud.
. The L. E. Waterman Company through a long series of years and by the expenditure of large sums of money in advertising, has made the name Waterman, in connection with the fountain pen business, of great value by creating a demand for pens of its make. The sole value of the name of Arthur A. Waterman lies in the fact that the surname, used in connection with the fountain pen business, allows others to divert the trade from the defendant to the user of the name. The various concerns that Arthur A. Waterman has formed have not been prosperous, nor has he contributed to the value of the name. One after another has gone out of business owing to financial embarrassment.
The evidence in this case is overwhelming that, through the use of the name Waterman by the plaintiffs, substantial trade has been thus diverted from customers purchasing pens of the latter’s make in the belief that they were procuring pens of the defendant’s manufacture.
Very little need be said of the plaintiffs’ application for an injunction. Any right that they might have for such relief is predicated on their right to use the name of Waterman. With loss of the right to use that name their entire case fails.
The findings of the Special Term, inconsistent herewith, are reversed and the decree appealed from reversed, with costs to the appellant, and judgment granted for the defendant, with costs.
Clarke, P. J., Laughlin, Dowling and Smith, JJ., concurred.
Decree reversed, with costs, and judgment ordered for defendant, with costs. Order to be settled on notice.